I believe people are substantially underestimating how much the economy contributes to Trump’s support, and being more aware of it would help better protect the democracy of the most powerful country in the world.
In 2020, the US budget deficit more than tripled. This and other (I think much smaller) factors resulted in US real median household income increasing by a completely unprecedented 11.6% in 2020 according to the Congressional Budget Office. Prior to that year, US real median household income under the Trump administration had improved by the 7% it had under the last Obama administration. However, by the end of 2020, US real median household income had increased by 19.3% total during the Trump administration, more than the 17.8% it had increased over all 4 previous presidential terms combined. If this had been accomplished in a way that didn’t decrease long run incomes, we would have called it a miracle. Nothing anywhere near this has happened in the 41 years this statistic has been recorded. Caring about the long run impacts of deficits is esoteric. A miracle is what Americans of normal education experienced.
Polling bears this out. While partisans typically care deeply about culture wars, swing voters (who overall switched from voting from Biden to planning to vote for Trump) are concerned about the economy instead.
For the median income data source, see the supplemental data section. After thinking about various sources’ methodology for this statistic more than my economics professors have, I believe this is the highest quality source for this statistic.
Hey Ms. Albrecht, I believe this tendency to underestimate pocketbook issues is likely true of the general populace, though political operatives are usually more aware of their significance, e.g., election probability models invariably incorporate measures of economic activity. However, these models typically focus on current/​incumbent economic performance, which is the case now: discontent is less about the excitement about real incomes in 2020 (not least since a lot was going on at the time...) and more about 2024 price levels.
Federal transfer payments notwithstanding, near-term macroeconomic outcomes usually have little to do with the White House’s agenda,* which makes it particularly unfortunate that we don’t do more to separate economic and social policymaking...
* That said, some of the inflation can be attributed to Biden’s 2021 stimulus, and rents are high in part due to a surge in demand from new migrants amid extremely constrained housing supply (a straightforward economic reality, agnostic to the merits of said migration).
I’m glad experts are taking it more seriously than laypeople. However, I still feel like laypeople can have a lot of influence. Many of us are performing outreach in swing states, have significant online presences, and/​or have friends or family members who are undecided.
I also think that these extremely unusual circumstances merit experts focusing on economic conditions outside the current presidential term more than would normally be the case.
I do feel that the inflation problems Biden has experienced are largely self-inflicted (to the extent that politicians can influence economic conditions, which I agree is generally overestimated under normal circumstances). His budget deficit in his first year wasn’t much smaller than Trump’s, which was another unprecedented circumstance and I believe also unnecessarily large. The deficit has still not come down to its normal levels for this part of the business cycle (even the levels before inflation was a problem). The Economist often argues that the deficits have played a big role in inflation, and my professors in my economics major have encouraged me to trust their analysis a lot. It’s still helpful to notice how little room for error he had given the context. I feel the role of deficits under Biden is more commonly understood in our community than the role of the deficit in 2020.
You’re welcome. The Economist, in my opinion, has some minor biases but is usually very reasonable. The nuance I would add is that the effect of any fiscal expansion—and I’d be more inclined to emphasize expansion rather than the deficit per se—depends on many factors, not least of which is the concurrent output gap. M.Y. summarizes that point well.
To be fair, following a decade of persistently below-target inflation in the U.S., and to an even greater degree in other major developed economies, inflation wasn’t the top concern on anybody’s mind! Also, speaking of other countries, the other big consideration is that while such fiscal expansion likely drove U.S. prices higher than they would’ve gone otherwise, high inflation has in fact been a fairly global issue since it began in 2021.
I will add that I found this type of analysis for why inflation was higher in the US persuasive. For example, this study from 2022 by the Federal Reserve Bank of San Francisco found that likely 3 percentage points of the higher inflation (basically all of it at the time) in the US compared to other rich countries was due to the stimulus in the US. But yes, I agree that the history of low inflation (and I believe lower stimulus than was appropriate during The Great Recession) made this a reasonable mistake to make.
I should note that the purpose of my post wasn’t to make a point about the pros and cons of different policies. I just wanted to point out that the personal experiences of voters were probably pretty different than most of us were thinking. I feel like I should have put more thought into making that clearer. I’ve been enjoying our conversation though!
I feel more confident about this than I did in July.
The 2021 US real median household income numbers were released, and they showed a 1% decrease despite a similarly large stimulus package and real GDP growth improving by 7 percentage points, because inflation got so bad. Without a large stimulus package, and with worse inflation and real GDP growth, incomes could easily have decreased in 2022. US real median household income grew by 90% between 1979 and 2021, making a decrease a rare and important experience.
Nate Silver also came out with an article making a similar argument, noting that real disposable personal income has stagnated during the Biden administration. While I dislike this source because it is not a median measurement in a time when incomes could well be growing faster for poorer Americans than richer ones, he notes that it has historically been one of the best predictors of election outcomes.
I believe people are substantially underestimating how much the economy contributes to Trump’s support, and being more aware of it would help better protect the democracy of the most powerful country in the world.
In 2020, the US budget deficit more than tripled. This and other (I think much smaller) factors resulted in US real median household income increasing by a completely unprecedented 11.6% in 2020 according to the Congressional Budget Office. Prior to that year, US real median household income under the Trump administration had improved by the 7% it had under the last Obama administration. However, by the end of 2020, US real median household income had increased by 19.3% total during the Trump administration, more than the 17.8% it had increased over all 4 previous presidential terms combined. If this had been accomplished in a way that didn’t decrease long run incomes, we would have called it a miracle. Nothing anywhere near this has happened in the 41 years this statistic has been recorded. Caring about the long run impacts of deficits is esoteric. A miracle is what Americans of normal education experienced.
Polling bears this out. While partisans typically care deeply about culture wars, swing voters (who overall switched from voting from Biden to planning to vote for Trump) are concerned about the economy instead.
For the median income data source, see the supplemental data section. After thinking about various sources’ methodology for this statistic more than my economics professors have, I believe this is the highest quality source for this statistic.
Hey Ms. Albrecht, I believe this tendency to underestimate pocketbook issues is likely true of the general populace, though political operatives are usually more aware of their significance, e.g., election probability models invariably incorporate measures of economic activity. However, these models typically focus on current/​incumbent economic performance, which is the case now: discontent is less about the excitement about real incomes in 2020 (not least since a lot was going on at the time...) and more about 2024 price levels.
Federal transfer payments notwithstanding, near-term macroeconomic outcomes usually have little to do with the White House’s agenda,* which makes it particularly unfortunate that we don’t do more to separate economic and social policymaking...
* That said, some of the inflation can be attributed to Biden’s 2021 stimulus, and rents are high in part due to a surge in demand from new migrants amid extremely constrained housing supply (a straightforward economic reality, agnostic to the merits of said migration).
Thank you for sharing!
I’m glad experts are taking it more seriously than laypeople. However, I still feel like laypeople can have a lot of influence. Many of us are performing outreach in swing states, have significant online presences, and/​or have friends or family members who are undecided.
I also think that these extremely unusual circumstances merit experts focusing on economic conditions outside the current presidential term more than would normally be the case.
I do feel that the inflation problems Biden has experienced are largely self-inflicted (to the extent that politicians can influence economic conditions, which I agree is generally overestimated under normal circumstances). His budget deficit in his first year wasn’t much smaller than Trump’s, which was another unprecedented circumstance and I believe also unnecessarily large. The deficit has still not come down to its normal levels for this part of the business cycle (even the levels before inflation was a problem). The Economist often argues that the deficits have played a big role in inflation, and my professors in my economics major have encouraged me to trust their analysis a lot. It’s still helpful to notice how little room for error he had given the context. I feel the role of deficits under Biden is more commonly understood in our community than the role of the deficit in 2020.
You’re welcome. The Economist, in my opinion, has some minor biases but is usually very reasonable. The nuance I would add is that the effect of any fiscal expansion—and I’d be more inclined to emphasize expansion rather than the deficit per se—depends on many factors, not least of which is the concurrent output gap. M.Y. summarizes that point well.
To be fair, following a decade of persistently below-target inflation in the U.S., and to an even greater degree in other major developed economies, inflation wasn’t the top concern on anybody’s mind! Also, speaking of other countries, the other big consideration is that while such fiscal expansion likely drove U.S. prices higher than they would’ve gone otherwise, high inflation has in fact been a fairly global issue since it began in 2021.
Thanks for sharing your expertise.
I will add that I found this type of analysis for why inflation was higher in the US persuasive. For example, this study from 2022 by the Federal Reserve Bank of San Francisco found that likely 3 percentage points of the higher inflation (basically all of it at the time) in the US compared to other rich countries was due to the stimulus in the US. But yes, I agree that the history of low inflation (and I believe lower stimulus than was appropriate during The Great Recession) made this a reasonable mistake to make.
I should note that the purpose of my post wasn’t to make a point about the pros and cons of different policies. I just wanted to point out that the personal experiences of voters were probably pretty different than most of us were thinking. I feel like I should have put more thought into making that clearer. I’ve been enjoying our conversation though!
I feel more confident about this than I did in July.
The 2021 US real median household income numbers were released, and they showed a 1% decrease despite a similarly large stimulus package and real GDP growth improving by 7 percentage points, because inflation got so bad. Without a large stimulus package, and with worse inflation and real GDP growth, incomes could easily have decreased in 2022. US real median household income grew by 90% between 1979 and 2021, making a decrease a rare and important experience.
Nate Silver also came out with an article making a similar argument, noting that real disposable personal income has stagnated during the Biden administration. While I dislike this source because it is not a median measurement in a time when incomes could well be growing faster for poorer Americans than richer ones, he notes that it has historically been one of the best predictors of election outcomes.